BUSINESS MODEL
Offline Payments as Institutional Funding Architecture
Governed Offline Payments are designed first and foremost as resilience infrastructure. When implemented within regulated payment systems, however, the reservation-backed structure of the governed offline architecture may also have institutional funding and liquidity management implications. These implications arise directly from the way offline capability is designed and governed.
Reservation-Backed Offline Capacity
Offline spending capacity is established through centrally governed reservations derived from available balances and approved credit capacity. These reservations remain within regulated accounts at banks or licensed financial institutions. Funds are not transferred to devices and are not converted into stored value.
Subject to policy design and regulatory treatment, such reservation-backed balances may function as stable operational balances within regulated institutions. In funding terms, they may be treated as stable operational float retained on the balance sheets of regulated financial institutions. This structural characteristic distinguishes governed offline architecture from models in which liquidity migrates to device-level stores or external digital value representations.
Reservation-backed offline capacity remains on regulated institutions’ balance sheets under policy control.
Software Licensing Model
Crunchfish licenses its architecture as software, structured according to the nature of the payment system. The licensing structure preserves governance clarity while enabling broad implementation across heterogeneous device and institutional environments.
Licensing fees on the system level is proportional to the positive funding efficiency impact in regulated financial institutions by offline reservations. Minimum commitments may apply.
Software licensing for offline wallets for service providers is applied either per wallet or as an enterprise license for all users of a service provider.
Open payment systems
In open payment systems, such as those operated by central banks or national system operators, the architecture is licensed at system level under FRAND* principles for the governed interoperable Layer-2 capability to ensure vendor neutrality and broad ecosystem participation.
*FRAND: Fair, Reasonable, And Non-Discrimatory license framework.
Closed-loop wallet deployments
In closed-loop deployments, where a wallet provider performs both the system operator and service provider roles, the institutional economics are concentrated within a single regulated entity.
A combination of system level and service provider licensing is applicable in this scenario.
Alignment of Resilience, Governance and Institutional Economics
The architectural principle is alignment between payment resilience, regulatory control, and institutional funding architecture. Offline capability is implemented without altering settlement authority, expanding money supply, or introducing parallel stores of value. Reservations remain within regulated institutions under central oversight. Liquidity does not migrate outside the underlying payment system.
At the same time, the reservation-backed structure may support funding stability within participating institutions, subject to regulatory treatment. Resilience and institutional economics are not necessarily competing objectives Under a governed offline architecture they can reinforce each other.
Governed offline can convert resilience into stable, low-cost funding.
Illustrative funding efficiency example
If 50 million users maintain an average offline reservation of USD 10, this corresponds to USD 500 million in reservation-backed balances remaining within regulated institutions. At an alternative funding cost of 5%, this could represent up to USD 25 million in annual funding cost avoidance.
This example is illustrative only. The real funding efficiency impact depends on adoption levels, reservation behaviour, interest rates, and regulatory classification.
Dual Licensing Structure
System-level governance licensing for open payment systems and institutional licensing for closed-loop wallet deployments.
